Read these 10 tips if you might be among the millions out of work in 2009

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The numbers are grim enough to make anyone wince. Last month the unemployment rate in the United States reached 6.5 percent, its highest level in 14 years. Even worse, many economists are predicting that the jobless rate will climb all the way to 8 percent in 2009.

Those percentages can sound rather abstract and impersonal — that is, until you start getting the sense that a job loss could affect you or someone you love. Then the numbers suddenly become highly personal, and they can fill your life with anxiety and uncertainty.

At times like this, it’s important to take charge of your situation while you still have a job and a steady paycheck. The following tips can help you do just that.

1. Create an emergency fund. Make it your top priority to set aside enough money to cover your basic living expenses for three to six months. This should give you the ability to pay your rent or mortgage, buy food and repay debts during a bout of unemployment. Consider socking this money away in an online-only, high-yield money market account or a short-term certificate of deposit. For more details about how to choose such an account and earn more interest on your dough, read
this past “10 Tips” column
on the subject.

2. Start slashing your spending, pronto. Do whatever you can not to spend excessively on items and services you don’t truly need. This will make it even easier to build up that emergency fund once and for all. Monitor your expenses for a few weeks or a month so you can see where you can realistically cut back. Here are some biggies to remember:

Holiday spending: Resolve not to go nuts this year. There’s no reason to put pressure on yourself to repeat last year’s spending performance.

Child care: To save some serious money each month, could you possibly ask grandparents or other extended family members to watch your child for you? You also could consider applying for scholarship help at your day-care facility or making a switch to a low-cost preschool program offered by the public school district where you live.

Car payments: For a time, could your family get by with one vehicle instead of two? Or could you get out from under a car payment by selling a more expensive car and replacing it with a less expensive used vehicle?

Deductibles: Deductibles are the sums of money you have to fork over before your insurance policies come to the rescue. You could save money by contacting all of your insurers — for your home, automobiles and health and disability plans — and bumping your deductibles up by a few hundred dollars apiece.

3. Use credit cards with great caution. Especially if you have a hunch that a layoff might be looming, be extra careful with credit. A credit card can keep you in denial about your true financial situation. Accumulating debt will only add to your stress — and you don’t need any more stress, whether you ultimately lose your job or not.

4. Talk about money with your partner. Even when things are going well, it’s common for one partner to be completely unaware that the other partner has different financial priorities and goals. A layoff — or the specter of a layoff — can put the spotlight on such differences and lead to terrible fights. To avoid this, talk honestly and set goals together about how to cope as a team in the coming weeks and months.

5. Tackle high-interest debt. Before a layoff ever strikes, make sure you’re not letting debt hang around for months on a high-interest credit card. Transfer that debt to cards with lower interest rates, or consider paying it off with money from a small closed-end loan from your bank or credit union. Then over the next three months or so, you can concentrate on paying back that lower-interest loan.

6. Network, network, network. Always make a point of getting to know as many people as you can in your line of work. By having plenty of friends and contacts in your industry, you’ll stand a better chance of finding work quickly if you lose your job. If you know a layoff is on the horizon, reflect on all the friends, colleagues and contacts you’ve ever made in your industry, and start reaching out to them now in a friendly way. Ask them whether they know of any openings, opportunities or potentially useful contacts in your field.

7. Line up a line of credit while you’re still employed. If you own a home and you can see that a job loss might be coming, consider opening a home-equity line of credit and keeping it open. Don’t tap into the line of credit at all; just know that it’s there in case a real emergency hits. Some lenders — but not all — charge an annual maintenance fee in the $75 to $100 range for keeping a line of credit open, but that can be worth it for the peace-of-mind factor. You may find that it’s harder to arrange for a line of credit in the current economic environment, but it’s still worth trying. (Big, fat cautionary note: Failure to repay a home equity line of credit could cause you to lose your home, so definitely educate yourself about this form of borrowing before you proceed. The Federal Reserve Board source at the end of this column can help.)

8. Pursue disability coverage before you lose your job. Personal disability coverage is an important thing to have — and it’s also important to secure coverage based on your current level of income. Apply for such coverage while your income is at its highest. This would involve supplementing the group coverage you may have through your job with individual coverage. If you buy additional coverage on your own, you can take it with you when you change jobs, and it will be tax-free. Comprehensive disability coverage can be very costly, but you can find accident-only disability policies for as little as $25 a month. At least you’d have that much coverage during a period of unemployment; once you get back on your feet, you could make sure you have disability insurance that covers both accidents and illnesses.

9. Go after higher education while you can. Do you work for a large company that offers a “Corporate U,” or for an employer that helps cover education costs at schools in your area? Tap into that resource so you can improve your skills and bolster your resume. Hundreds of corporate university classes have been accredited, meaning you could get college credit for them if you ever enroll in a degree program.

10. Examine your health insurance policy. Be clear on what your health plan covers, and figure out how much it would cost to extend your employer’s group insurance coverage through the federal program COBRA. Be aware that you would have to pay both the employer and employee shares of the premiums — ouch! — but at least you’d get to keep the same coverage.